Correlation Between Cinis Fertilizer and Lipum AB

Can any of the company-specific risk be diversified away by investing in both Cinis Fertilizer and Lipum AB at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Cinis Fertilizer and Lipum AB into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Cinis Fertilizer AB and Lipum AB, you can compare the effects of market volatilities on Cinis Fertilizer and Lipum AB and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Cinis Fertilizer with a short position of Lipum AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cinis Fertilizer and Lipum AB.

Diversification Opportunities for Cinis Fertilizer and Lipum AB

0.01

Correlation Coefficient

Cinis Fertilizer  Lipum AB

Significant diversification

The 3 months correlation between Cinis and Lipum is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Cinis Fertilizer AB and Lipum AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lipum AB and Cinis Fertilizer is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Cinis Fertilizer AB are associated (or correlated) with Lipum AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lipum AB has no effect on the direction of Cinis Fertilizer i.e., Cinis Fertilizer and Lipum AB go up and down completely randomly.

Pair Corralation between Cinis Fertilizer and Lipum AB

Assuming the 90 days trading horizon Cinis Fertilizer AB is expected to under-perform the Lipum AB. But the stock apears to be less risky and, when comparing its historical volatility, Cinis Fertilizer AB is 1.22 times less risky than Lipum AB. The stock trades about -0.1 of its potential returns per unit of risk. The Lipum AB is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  614.00  in Lipum AB on October 7, 2024 and sell it today you would earn a total of  736.00  from holding Lipum AB or generate 119.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Cinis Fertilizer AB  vs.  Lipum AB

Cinis Fertilizer

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cinis Fertilizer AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Lipum AB

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Lipum AB are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Lipum AB is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Cinis Fertilizer and Lipum AB

The main advantage of trading using opposite Cinis Fertilizer and Lipum AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cinis Fertilizer position performs unexpectedly, Lipum AB can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Lipum AB will offset losses from the drop in Lipum AB's long position.

The idea behind Cinis Fertilizer AB and Lipum AB pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.